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Changing the Game in Affordable Housing

In a significant structural shift within the U.S. housing market, local investors have dramatically outpaced traditional builders in supplying essential starter homes. According to New Western's recent report, investors provided 216.9% more entry-level homes than builders in 2025, illustrating a growing trend in real estate investment aimed at tackling the nation’s affordable housing crisis.

This challenging landscape highlights that the issue lies not solely in the quantity of housing units available but in the lack of usable, affordable homes targeted at first-time buyers and essential workers. Starter homes—properties typically priced under $300,000—have become increasingly scarce, despite a notable number of vacancies across the country. Notably, nearly 1 in 10 homes in the U.S. remains unoccupied, as identified by the U.S. Census Bureau.

Key Findings from the 2025 Flip Side Report

The report flashed light on several critical findings regarding housing supply dynamics:

• - Investor Dominance: Local investors successfully delivered 120,193 starter homes compared to builders' 37,931.
• - Affordable Price Bands: Small investors accounted for the substantial majority of inventory in lower price segments, with 83.75% of new supply under $215,000 and 69.5% under $250,000.
• - Concentration of New Construction: The construction of new homes remains disproportionately focused on higher price tiers, with only 10.6% of new builds classified as starter homes.

Interestingly, more than 72% of renovated homes were acquired off-market, highlighting their prior states as unviable listings in dire need of repairs—tasks most typical homeowners are often unwilling or unable to tackle. This trend underscores the essential role of revitalization in supporting broader economic activity across at least $20.9 billion in transactions, bolstering jobs within brokerage, lending, and local services.

The Revival of a Housing Movement

Dubbed "The Great Renovation," this grassroots movement involves local investors stepping in to renovate vacant or distressed properties, returning them to the market as affordable, move-in-ready starter homes. These homes have the unique advantage of existing within established neighborhoods and thus sidestep the complicated processes associated with land development and zoning changes.

The impact is strikingly evident across major U.S. cities, where investor-led revitalization is consistently outpacing new construction at entry-level price points:

• - St. Louis: 1,069% more starter homes supplied by local investors
• - Boston: 571% more starter homes from local investors
• - Atlanta: 296% more starter homes from local investors
• - Charlotte: 149% more starter homes from local investors

Addressing the Core of Housing Affordability

The importance of starter homes cannot be overstated; they form the foundation of the housing ecosystem. When entry-level inventory dwindles, it curtails mobility across all price tiers, hampering prospective move-up transactions and diminishing overall market circulation.

In a thought-provoking statement, Kurt Carlton, co-Founder and President of New Western noted, "What if the real housing crisis isn't that we haven't built enough homes, but that we're letting millions of starter homes disappear?" This quote encapsulates the essence of the revitalization challenge and the critical role small investors play in restoring the foundations of the housing ladder.

Houses traditionally serve as pivotal assets for middle-class wealth generation and economic progress. When starter homes are no longer available, first-time buyers face extended periods as renters, leading to decreased equity formation and limited inventory flow through the housing ladder.

Recognizing revitalization as a fundamental component of housing supply and supporting policies that bolster it without obstructing the flow could serve as a game-changer in expanding affordable inventory. As we look forward to the 2026 data, it will be crucial to assess whether this segment of the market is nurtured or stifled in the process of resolving America's housing challenges.

About New Western

New Western stands as the nation's foremost home buyer and an innovative real estate investment marketplace. Its operations connect over 250,000 local investors with a wealth of residential properties, promoting swift transactions that create new, affordable housing options through renovation.

For further insights into their impact and ongoing efforts, learn more at New Western.